The Government says it will address steep electricity prices by acting “with urgency” to reverse the ban on offshore oil and and gas exploration, as well as removing regulations impeding the construction of facilities to import liquefied natural gas “as a stop gap”.
The decisions were made in Cabinet today, along with other moves aimed at addressing what the Government says is a “serious risk to New Zealand’s energy security and affordability”.
Energy Minister Simeon Brown said the country currently had an energy shortage.
“The lakes are low, the sun hasn’t been shining, the wind hasn’t been blowing, and we have an inadequate supply of natural gas to meet demand.
“That has led to New Zealand currently having the highest wholesale electricity prices of any of the countries we normally compare ourselves to.
“It is devastating for our manufacturing and export sectors, and is sadly leading to firms reducing production or closing entirely.
“New Zealand needs abundant, affordable energy. That’s why the Coalition Government is taking a series of immediate actions to restore confidence to our energy sector and remove regulatory barriers that have stopped firms generating electricity or bringing in the fuel that Kiwis need.”
A Government statement said natural gas production dropped by 12.5% in 2023 and by a further 27.8%for the first three months of this year, creating a nationwide shortage.
“This has resulted in reductions in manufacturing output, and electricity generators resorting to more coal and diesel to power our electricity system,” it said.
Resources Minister Shane Jones said, unlike many other countries, New Zealand was “blessed with energy resources under our feet”.
“Natural gas has drawn new industries to our shores, created well-paying jobs in our regions, and powered the producing, manufacturing, and exporting businesses that are the backbone of our economy.
“It is critical for New Zealand that these keep going, but already some businesses are having to close their doors until energy prices come down; with hundreds of jobs at stake. That’s why we are taking urgent action to shore up our energy security.
“Oil and gas explorers need to have the confidence to invest here and know they will have a key place in New Zealand’s energy sector now and into the future.”
The ministers would report back to Cabinet in October with options for mitigating sovereign risk in a liquefied natural gas (LNG) facility and domestic gas production.
The Ministry of Business, Innovation and Employment (MBIE) estimates that about 50 countries across the globe use LNG to support their domestic energy production.
Other things Cabinet has agreed to is looking at easing restrictions on electricity lines companies owning generation, enhancing access to contingent, hydro storage and improving electricity market regulation.
Fast-track for electricity generation, distribution, and transmission projects
Brown also said the Government would progress reforms aimed at making it “easier and cheaper” to consent, build and maintain renewable electricity generation, and electricity distribution and transmission projects.
The Energy MInister said there was an exciting future powered by clean and green renewable electricity but “buttressed by fossil fuels”.
“Through electrification, we can supercharge our economy, tackle climate change, and strengthen our energy security.
“The Government’s Electrify NZ plan means taking advantage of New Zealand’s abundant renewable energy resources, so that our cars, buses, trains, ferries, and manufacturers are increasingly powered by wind, water, and the sun.”
RMA Reform Minister Chris Bishop said if New Zealand was to achieve its ambitious goals for boosting the economy and reducing emissions, it must make fundamental changes to its planning and regulatory settings.
The Electrify NZ plan involved establishing a one-stop-shop fast track approvals and permitting regime – under the Fast-track Approvals bill, set to pass into law before the end of the year.
It would also include amendments to the Resource Management Act to speed up resource consenting.
The change comes through the Government’s second Resource Management Amendment Bill, to be introduced later in the year as part of the second phase of the Government’s RMA reform.
The Government would also introduce a bill to enable offshore renewable energy to be in place by mid-2025, and update regulatory settings for electricity networks and new connections.
Investing in fossil fuels ‘like buying stocks in the Titanic’ – Greens
Green Party energy spokesperson Scott Willis said fossil fuels were a “sinking ship” New Zealand could not afford to tie its future to.
“Investing in fossil fuels in the middle of a climate crisis is like buying stocks in the Titanic.
“We can build a more sustainable and affordable energy network that puts people and planet before the profits of our gentailers.
“Resorting to fossil fuels will delay the transition we so desperately need and instead turn up the temperature on the already raging climate crisis. “
He said profits from gentailers should be re-invested into enhancing energy efficiency and bolstering renewable energy supply.
“Delaying this is partly why we’re in this situation now – but it’s not too late to turn this ship around.
Labour Party leader Chris Hipkins said the Government’s announcement made today “the day the Government officially gave up on tackling climate change”.
He said renewable energy was abundant in New Zealand and that should be ramped up.
“Billions of dollars have been invested in … exploration in New Zealand for new oil and gas – it has not found any.”
He said the problem was that gentailers had prioritised maximising profit over reinvestment in renewable electricity generation.
“Fossil fuels are not our future, renewable energy is.”
